Subsequent Events

12 Months Ended

Dec. 31, 2020

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

Midland Basin Acquisition

On January 7, 2021, Earthstone, Earthstone Energy Holdings, LLC, a subsidiary of the Company (“EEH” and collectively with Earthstone, the “Buyer”), Independence Resources Holdings, LLC (“Independence”), and Independence Resources Manager, LLC (“Independence Manager” and collectively with Independence, the “Seller”) consummated the transactions contemplated in a Purchase and Sale Agreement dated December 17, 2020 (the “Purchase Agreement”). The Seller was unaffiliated with the Company. At the closing of the Purchase Agreement, among other things, EEH acquired (the “IRM Acquisition”) all of the issued and outstanding limited liability company interests in certain wholly owned subsidiaries of Independence and Independence Manager (collectively, the “Acquired Entities”) for aggregate consideration consisting of the following: (i) an aggregate amount of cash from EEH equal to approximately $131.2 million (the “Cash Consideration”) and (ii) 12,719,594 shares of the Company’s Class A Common Stock issued to Independence.

Acquisition costs of $1.0 million related to the IRM Acquisition are included in Transaction costs in the Company's consolidated statements of operations for the year ended December 31, 2020. The acquisition will be accounted for as a business combination, with the fair value of consideration allocated to the acquisition date fair value of assets and liabilities acquired. The Company’s post-acquisition date results of operations of the Acquired Entities will be incorporated into the Company's interim condensed consolidated financial statements for the three months ended March 31, 2021.